This week in banking - Government unveils 2019 Federal Budget

It's Friday afternoon, which means it's time for a rundown of all that went on in Australian banking in the past week.

Tax cuts and infrastructure headline 2019 Federal Budget

On Tuesday night, all eyes were on Treasurer Josh Frydenberg, who took to parliament floor to unveil the Coalition’s 2019 Federal Budget / try to win Australians’ favour ahead of the upcoming election. The two big announcements were the proposed tax cuts and the $100 billion boost to infrastructure we’ll see over the next 10 years. Here’s a rundown of the main winners:

Middle income earners will get an extra $550 in their pockets this year, bringing their total tax offset to $1,080.

Small businesses will have the current tax rate of 27.5% drop to 26%, and will see the instant asset write-off threshold increase from $20,000 to $25,000.

Pensioners will benefit from the government’s Energy Assistance Payment, a one-off payment of $75 for singles and $125 for couples to help cope with the high cost of energy prices.

ACCC increases pressure on energy providers

The Australian Competition and Consumer Commission (ACCC) doesn’t have many nice things to say about the current state of the energy market. Its Retail Electricity Pricing Inquiry of last year drew a lot of attention to rising energy bills and the pressure they’re putting on Australian households. Recently, the competition watchdog released its first electricity monitoring inquiry, which set out its plans to help rein in energy providers and restore affordability to the market.

Fixed rates

Banks are anticipating an RBA price cut in the coming months, and the number of cuts to fixed rates reflects this. Take Macquarie Bank, which reduced rates for its Basic Home Loan by up to 0.40%. Owner occupiers looking to borrow between $150,000 and $750,000 and lock in a fixed term of 4 years will now receive a rate of 3.89% p.a. (3.88% p.a. comparison rate*).

Term deposits

Term deposit rates have been dropping for a good 6 months now, and seem to have picked up even more momentum as of late. This week, we saw Commonwealth Bank cut a majority of its short term deposits by 0.10%. Longer terms faced even bigger cuts, dropping between 0.15% and 0.20%.

Bankwest reduced rates for its Gold Term Deposit by 0.20% to 0.25%, while MyState Bank made cuts of between 0.05% and 0.20%. AMP also reduced its 3, 4 and 5 month rates from 2.65% p.a. to 2.55% p.a.

Bank of Melbourne and BankSA also made several cuts to their term deposit rate sheets, with cuts getting larger the longer the term length. Both banks’ 5 year rates dropped from 2.80% p.a. to 2.50% p.a.

With all the cuts to term deposits, you might be looking for a better value savings account to stash your savings instead. If that’s the case, be sure to check out our high interest savings account comparison page, or check out the sample below.

*WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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